Especially for FMCG brands, success comes from being noticed by as many consumers as possible.
In its latest annual Brand Footprint report on Vietnam’s most-chosen fast-moving consumer goods (FMCG) brands, Kantar Worldpanel Vietnam revealed that growing FMCG brands follow one simple rule: growth is about penetration - retaining and increasing the number of shoppers choosing your brand.
Our report identified growing brands use Consumer Reach Points, or CRPs, which measure how many households around the world a brand is reaching and how often they are being purchased, giving a true representation of shoppers’ choices and which has penetration at its heart. If your brand is popular, you get consumer brand awareness in advance and then if you win the hearts and minds of consumers you win their money.
The Top 3 positions holders, Unilever, Vinamilk and Masan, enter over 90 per cent of Vietnamese households. Of the Top 10 FMCG manufacturers in the urban 4 key cities, including Ho Chi Minh City, Hanoi, Da Nang and Can Tho, and rural Vietnam, 80 per cent have high penetration (from 70 per cent up to 100 per cent). This means increasing brand penetration is pivotal. And focusing on recruiting new shoppers is the way they promote their brands.
Firstly, innovation is a key penetration strategy for the Top 10 manufacturers. Innovation helps them meet consumers’ specific needs and also expand their shopper base. Dove from Unilever is an outstanding example, increasing its CRPs last year by 25 per cent with the launch of its Real Beauty Campaign. The campaign seeded confidence among Vietnamese women about their own beauty through many activities and attracted an additional 63,000 urban households.
Secondly, distribution channels open the door to entering into the baskets of consumers. In Asia’s growing urban regions, including Vietnam, distribution assumes even greater marketing significance. Local brand growth comes from concentrating on outlets in lower tier cities where global brands are often not found and boosting brand awareness in-store. Vinamilk, for instance, has grown by being well-distributed and highly visible on store shelves. Therefore, it’s essential for you to know where your consumers shop.
Last but not least, advertising moves people towards your brands. The Top 10 brand owners spend millions of dollars annually on marketing and that gives them a better chance of succeeding in the CRPs they achieve.
Advertising convinces people to spend money they perhaps don’t have on something they don’t necessarily need. Suntory PepsiCo is one of the fastest growing players, with the successful launch of Mountain Dew in late 2013. Its launch used all levers to make the brand memorable, from traditional marketing (TV, outdoor, digital, and in-store, etc.) to many campaigns for the young Vietnamese community (X-Game sponsorships, movie tickets, skateboard events, and mini-games). And don’t forget that creativity in advertising makes your brands gain consumer attention.
So, setting your penetration goals and focusing on these strategies, you win at the moment of truth - the moment at which the shopper decides to buy your brand instead of another.
The differences in consumers and their lifestyles between urban and rural areas lead to different strategies being adopted by the Top 10. The basic difference is in disposable income, which is about 2.5 times higher in urban areas than in rural areas.
While 70 per cent of the population in rural areas come from low and middle-income groups, the same proportion are middle and high-income groups in urban areas. Rural consumers prefer necessity categories, with good prices and a lot of promotions, while high-earners are heading more towards premiumization, with high quality and safety.
In terms of lifestyle, rural households often watch TV every day and it’s very easy for your brands to approach them by appearing attractively on TV during prime time. Meanwhile, high internet penetration is happening in urban communities and it’s wise to pay more attention to digital on top of traditional marketing channels.
One more noticeable thing is where consumers purchase. While street shops remain dominant in rural areas (accounting for 77 per cent), in urban areas it differs across sectors, with a range of retailers. Convenience stores and specialty stores are emerging in growth and e-commerce has potential for the long term in modern life. Hence, it’s also important for brands to adopt effective distribution strategies. There are still a lot of differences between urban and rural areas so manufacturers should spend more time understanding and reacting rapidly in the right way.
The main difference in Vietnamese consumer behavior compared to other ASEAN countries comes from differences in culture, and if you deeply understand the local culture then everything else follows. Furthermore, strategies are also affected by the economic situation of each country, and don’t forget that Vietnam is quickly developing and leapfrogging in a lot of aspects, especially in new things and new technologies.
In terms of FMCG, about 70 per cent of categories in Vietnam reach less than 50 per cent penetration (on a yearly basis) and this implies huge opportunities for owners of brands in FMCG to conduct market development in a smart and creative way, to win many more consumers and be more successful in the market.
Another difference is reflected in its retail landscape, with traditional channels still holding the most power. There is also rapid development in other emerging channels such as supermarkets and hypermarkets, convenience stores, specialty stores, one-stop shopping malls, and e-commerce.